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Greek debt crisis: Why a bailout referendum? Greek debt crisis: Why a bailout referendum?
(1 day later)
Greece's cash-strapped banks are to remain shut for a week, until after a key 5 July referendum on the country's bailout conditions. Greece is going ahead with a controversial 5 July referendum on its bailout conditions, despite much criticism of Prime Minister Alexis Tsipras's decision to hold it.
The leftist Syriza government's surprise decision to call that vote scuppered its bailout talks with eurozone ministers. The bailout dispute has frozen credit for Greece's cash-strapped banks - they closed on Monday and will not reopen until 6 July at the earliest.
The Greeks have very little time to prepare for a referendum whose outcome could decide their future in the euro. The leftist Syriza government's surprise decision to call the referendum scuppered its bailout talks with eurozone ministers.
Greece has very little time to prepare for a referendum whose outcome could decide its future in the euro.
What is the point of the referendum?What is the point of the referendum?
The government says the EU-IMF bailout terms are unacceptable, but cannot simply be rejected without the Greek people having their say.The government says the EU-IMF bailout terms are unacceptable, but cannot simply be rejected without the Greek people having their say.
The issue is so important for Greece's future that "we decided to turn to the citizens, to explain our negative attitude to it [the bailout], but to give them the choice", Finance Minister Yanis Varoufakis said. In a televised speech on Wednesday Mr Tsipras said a No vote would send a clear message that austerity had to stop. He dismissed suggestions that a No vote might oblige Greece to leave the eurozone.
Prime Minister Alexis Tsipras, in a letter to eurozone leaders leaked by the Financial Times, said holding a referendum "is a sovereign democratic right of the Greek people, necessary to ensure ownership over the financial assistance programme that will be eventually agreed with the institutions". He also fiercely attacked other European countries for acting in what he called an undemocratic way.
He told the Greek people that the lenders had resorted to "blackmail" in order to impose more austerity. "They wanted to suffocate our people and this is unacceptable in a Europe of solidarity and self-respect," he said.
Earlier he accused the lenders of "blackmail". And in a letter to eurozone leaders, he said holding a referendum "is a sovereign democratic right of the Greek people".
After five years of recession and welfare cuts many ordinary Greeks feel bitter that they have suffered while Europe's business elite recovered quickly from the financial crisis.After five years of recession and welfare cuts many ordinary Greeks feel bitter that they have suffered while Europe's business elite recovered quickly from the financial crisis.
More than democracy is at stake - a vote to reject the bailout could trigger a "Grexit", a Greek exit from the euro. More than democracy is at stake - a vote to reject the bailout could trigger a "Grexit", a Greek exit from the euro. Several European leaders, including Italy's PM Matteo Renzi and France's President Francois Hollande, have warned that a No vote would mean Grexit.
A No vote would formally cut the euro pipeline from lenders, and the Greek government could be forced to issue IOUs or a "new drachma" currency to prevent a banking collapse. Saying No would formally cut the euro pipeline from lenders, and the Greek government could be forced to issue IOUs or a "new drachma" currency to keep the economy afloat.
However, the EU has no mechanism for a country to leave the euro - it has never happened before.However, the EU has no mechanism for a country to leave the euro - it has never happened before.
What will the question be?What will the question be?
The language is quite technical, and many Greeks may struggle to understand it:The language is quite technical, and many Greeks may struggle to understand it:
"Should the proposed agreement be accepted, which was submitted by the European Commission, the European Central Bank, and the International Monetary Fund in the Eurogroup of 25.06.2015 and consists of two parts, which constitute their unified proposal?"Should the proposed agreement be accepted, which was submitted by the European Commission, the European Central Bank, and the International Monetary Fund in the Eurogroup of 25.06.2015 and consists of two parts, which constitute their unified proposal?
"The first document is entitled 'Reforms for the Completion of the Current Program and Beyond' and the second 'Preliminary Debt Sustainability Analysis'.""The first document is entitled 'Reforms for the Completion of the Current Program and Beyond' and the second 'Preliminary Debt Sustainability Analysis'."
Beside the question are two boxes: "Not approved/No; Approved/Yes".Beside the question are two boxes: "Not approved/No; Approved/Yes".
Uncertainty still surrounds the referendum. Mr Tsipras's political opponents say he has not told the Greek public exactly what the lenders were proposing, and what in particular he rejected. Uncertainty still surrounds the referendum. Mr Tsipras's political opponents say he has not explained clearly to the Greek public what the lenders were proposing, and what in particular he rejected.
Even before Greece's current bailout was set to expire on Tuesday, the government admitted that it would fail to repay €1.6bn (£1.1bn; $1.8bn) to the International Monetary Fund on time. The referendum question might yet change. Its validity has been questioned, as some politicians and analysts say it refers to negotiating documents that are no longer relevant.
But a last-ditch eurozone teleconference was arranged for Tuesday night, after Greece asked for a new two-year €29.1bn aid deal from the eurozone's European Stability Mechanism (ESM). So the referendum question might yet change. Europe's main human rights watchdog, the Council of Europe, says the referendum would "fall short of international standards" if held as planned.
Who wants a No vote in the referendum?Who wants a No vote in the referendum?
Syriza, the nationalist Independent Greeks, and far-right Golden Dawn say "No" to the bailout terms. Syriza, the nationalist Independent Greeks, and far-right Golden Dawn say No to the bailout terms.
Opposition parties object to holding a referendum, and their supporters are likely to vote "Yes" or abstain. Opposition parties object to holding a referendum, and their supporters are likely to vote Yes or abstain.
The main opposition parties are New Democracy (centre-right), To Potami (centrist) and Pasok (centre-left).The main opposition parties are New Democracy (centre-right), To Potami (centrist) and Pasok (centre-left).
What was the lenders' reaction?What was the lenders' reaction?
Anger. Eurozone finance ministers had been preparing for last-ditch talks on 27 June to hammer out a deal on reforms. Agreement would mean releasing the final €7.2bn bailout instalment that Greece desperately needs. Anger. Eurozone finance ministers had been preparing for last-ditch talks on 27 June to hammer out a deal on reforms in return for the final bailout instalment that Greece desperately needed.
But Mr Tsipras pulled his delegates out of talks the night before and announced the referendum.But Mr Tsipras pulled his delegates out of talks the night before and announced the referendum.
In an unusual move, the European Commission later published the detailed reforms that it wanted to negotiate with Greece.In an unusual move, the European Commission later published the detailed reforms that it wanted to negotiate with Greece.
But the Commission complained that "neither this latest version of the document, nor an outline of a comprehensive deal could be formally finalised and presented to the Eurogroup due to the unilateral decision of the Greek authorities to abandon the process".But the Commission complained that "neither this latest version of the document, nor an outline of a comprehensive deal could be formally finalised and presented to the Eurogroup due to the unilateral decision of the Greek authorities to abandon the process".
Commission President Jean-Claude Juncker said he felt betrayed by Mr Tsipras's move. "Playing off one democracy against 18 others is not an attitude which is fitting for the great Greek nation," he said.Commission President Jean-Claude Juncker said he felt betrayed by Mr Tsipras's move. "Playing off one democracy against 18 others is not an attitude which is fitting for the great Greek nation," he said.
IMF chief Christine Lagarde said any referendum would relate to "proposals and arrangements which are no longer valid".IMF chief Christine Lagarde said any referendum would relate to "proposals and arrangements which are no longer valid".
Germany's Chancellor Angela Merkel says there can be no new Greek deal until after the referendum.
Lenders' proposals - key sticking pointsLenders' proposals - key sticking points
Source: European Commission document, 26 Jun 15 (pdf)Source: European Commission document, 26 Jun 15 (pdf)
Why couldn't Greece get a bailout extension?Why couldn't Greece get a bailout extension?
There remains a big gap between what the lenders want and the Greek government's agenda.There remains a big gap between what the lenders want and the Greek government's agenda.
Syriza - a grassroots coalition of leftists - won elections in January promising to end austerity.Syriza - a grassroots coalition of leftists - won elections in January promising to end austerity.
The price for Greece's massive €240bn bailout, which started in 2010, was austerity. The budget cuts demanded by the lenders have thrown many Greeks into hardship and a quarter of the workforce is unemployed.The price for Greece's massive €240bn bailout, which started in 2010, was austerity. The budget cuts demanded by the lenders have thrown many Greeks into hardship and a quarter of the workforce is unemployed.
Syriza has urged the lenders to release the last €7.2bn of bailout money. But the lenders say Greece must agree to widen the scope of its sales tax (VAT) - to boost revenue - and drastically reduce the numbers entitled to early retirement. The pension system is unsustainable, they argue. Mr Tsipras is now calling for a new bailout worth €29.1bn. The lenders say Greece must agree to widen the scope of its sales tax (VAT) - to boost revenue - and drastically reduce the numbers entitled to early retirement. The pension system is unsustainable, they argue.
Those are the main sticking points, but the lenders also want much more action against corruption and tax evasion.Those are the main sticking points, but the lenders also want much more action against corruption and tax evasion.
The lenders are not convinced by Syriza's tax income projections. They also suspect that Syriza is unwilling to reform deeply-entrenched working practices.The lenders are not convinced by Syriza's tax income projections. They also suspect that Syriza is unwilling to reform deeply-entrenched working practices.